A considerable number of homeowners are being forced to sell their homes due to interest rate rises making their mortgages unaffordable, according to repossession litigations specialists, Moore Blatch.
Moore Blatch estimate the number of people forced to sell their homes could be equal to the numbers that are actually suffering repossession. This means the total number of people losing their homes because of interest rate rises could be as high as 35,000 in 2006.
The Department of Constitutional Affairs figures show that a total of 89,857 Court possession orders were made in 2006, the highest figure since 1993. However, only 19% of claims resulted in repossession, compared with 56% in 1993.
Moore Blatch speculate that the continued buoyancy of the housing market means that many homeowners can afford to sell their property and rent when finances become stretched.
Paul Walshe, head of lender services at Moore Blatch, says: “Many people who are struggling to pay their mortgage are just selling their property. This is fine whilst the market remains strong, but the recent rises in interest rates are likely to dampen demand and may well result in some of these ‘hidden repossessions’ becoming real repossessions.”
With a further interest rate hike expected by the end of the year, homebuyers are likely to feel the strain on their finances and the number of forced sales and repossessions are likely to increase.
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